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Backyard Living Sells Its Barbecue Sets for $170 Each * $ 1,800,000 / 75,000 Units
Backyard Living Has Enough

Question 139

Essay

Backyard Living sells its barbecue sets for $170 each.Suppose the company incurs the following average cost per barbecue set:
 Direct materials $52 Direct labor 28 Variable manufacturing overhead 11 Variable selling expenses 5 Fixed manufarturing overhead* 24‾ Total cost $120‾\begin{array} { l l } \text { Direct materials } & \$ 52 \\\text { Direct labor } & 28 \\\text { Variable manufacturing overhead } & 11 \\\text { Variable selling expenses } & 5 \\\text { Fixed manufarturing overhead* } &\underline{24} \\\text { Total cost } & \underline{\$ 120}\end{array} * $ 1,800,000 / 75,000 units
Backyard Living has enough idle capacity to accept a one-time-only special order from Superstore,Inc.for 2,000 barbecue sets at a sales price of $130 per set.Backyard Living will not incur $2 of variable selling expenses for this order.
How would accepting the order affect Backyard Living's operating income?

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